Purpose

To explain the liquidation options for a Purchase Order (PO) encumbrance, when it is appropriate to use each option, and how to use each option.


Overview

An encumbrance reserves funds for a planned expenditure.  This reduces the available budget in Commitment Control, making the funds unavailable for other purposes.  Liquidating the PO encumbrance is part of standard procure-to-pay processing, specifically vouchering.  When a PO voucher is budget checked, the PO encumbrance is reversed.


The typical PO lifecycle includes the creation of the PO, followed by the receipt, voucher and eventual close out of the PO.  In some cases, a PO will not be fully vouchered.  Depending on the activity against the PO, the PO encumbrance needs to be liquidated using another mechanism.  Options include canceling, completing a reductive change order, or finalizing related voucher(s).




This article was previously named PO- Understanding Close,Cancel,Change Purchase Orders.